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Banks’ Deposit Declines by N213bn

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  • Banks’ Deposit Declines by N213bn

BANKS’ deposit fell by N213 billion in December, reflecting impact of the economic recession on individuals and businesses. Meanwhile, Federal Government’s Bonds, FGB, recorded significant sell-off last week leading to a fall in prices in both the OTC platform and the Eurobond market.

Banks are mandated to keep 22.5 percent of their total deposit as Cash Reserve with the Central Bank of Nigeria (CBN). Consequently, the apex bank, on a monthly basis, debits banks for 22.5 percent of any increase in bank deposit for the month.

However, if a bank records decline in deposit, the CBN credits the bank 22.5 percent of that decline in deposit.

Financial investigations reveal that last week, the CBN credited banks N48 billion for CRR for the month of December, implying that banks in the country recorded a decline in deposit to the tune of N213 billion.

Earlier in June 2016 the Financial Stability Report of the CBN for half year 2016, stated that “Banks’ deposit with the CBN fell by 12.50 per cent at end-June 2016, compared with the 3.84 per cent decline at the end of the second half of 2015.

The Report had indicated that banks’ deposit fell to N3.69 trillion at the end of June 2016, from N3.95 trillion at the end of December 2015. Similarly, the share of banks’ deposit in the total deposit with CBN fell to 35.1 percent in June 2016 from 42.3 percent in December 2015.

N84bn inflow moderate cost of funds

Meanwhile cost of funds dropped to previous level after rising by almost 100 percent during the week. From 7.0 percent at the opening of business on Monday, short interest rates (Overnight borrowing and Open Buy Back, OBB) rose sharply to 14 percent by midweek following outflow of N222 billion for purchase of treasury bills. This was further compounded by outflow of another N2.2 billion for foreign exchange purchase. Hence market liquidity fell from N174 billion on Monday to N17 billion on Wednesday.

Market liquidity

Market liquidity was however revived due to inflow of N84 billion comprising N48 billion for CRR credit and N36.7 billion inflow from excess crude reserve. The inflows prompted market liquidity to rise and close at N56 billion.

Meanwhile the CBN will sell N195.9 billion worth of treasury bills this week in continuation of its effort to manage excess liquidity in the interbank money market. These comprise N36.77 billion worth of 91 Days bills, N39.17 billion of 182 Days bills and N120 billion worth of 364 Days bills. However due to inflows from payment of maturing bills of similar tenors and value, as well as inflow from statutory funds, the interbank money market is expected to be liquid this week with relative stability of cost of funds.

Investors dump FGN Bonds

Last week was a reversal of fortunes for federal government bonds, as there was massive sell-off by investors in Over-The-Counter (OTC) segment and the Eurobond segment.

According to analysts at Cowry Asset, a Lagos based investment firm: “In the just concluded week, FGN bonds traded at the OTC segment depreciated in value for all maturities amid sell pressure. The 20-year, 10.00 percent FGN July2030 debt10-year,16.39 percent FGNJAN2022debt, the7-year16.00 percent FGNJUN 2019 debt and the 5-year, 15.10 percent FGNAPR2017 debt depreciated by N0.67, N0.38, N0.39 and N0.14 respectively; theircorresponding yields rose to 16.30 percent (from 16.13 percent), 16.41 percent (from 16.24 percent), 16.37 percent (from 16.17 percent) and 14.82 percent (from 14.38 percent) respectively.

Elsewhere, FGN Eurobonds traded on theLondon Stock Exchange decreased in value across allmaturities amid sell pressure.The 10-year, 6.75 percent JAN28,2021bond, the5-year,5.13 percent JUL12,2018bondand the10-year,6.38 percent JUL12,2023bondlostUSD0.15 (yield rose to 5.75 percent),$0.35 (yield rose to 3.45 percent) and$0.32 (yield rose to 6.42 percent) respectively. This week, we expect a mix of bargain hunting and profit taking at the OTC market.”

Is the CEO/Founder of Investors King Limited. A proven foreign exchange research analyst and a published author on Yahoo Finance, Businessinsider, Nasdaq, Entrepreneur.com, Investorplace, and many more. He has over two decades of experience in global financial markets.

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Insurance

Heirs Insurance Group Unveils Revolutionary Website for Seamless Insurance Experience

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Heirs Life Assurance- Investors King

Heirs Insurance Group has launched a website designed to revolutionize the insurance experience for its customers.

With a focus on simplicity, accessibility, and personalized service, the new website aims to streamline the process of obtaining insurance coverage and empower customers to make informed decisions about their insurance needs.

The website boasts a range of innovative features that make navigating insurance options easier than ever before.

From simple and intuitive navigation menus to personalized insurance recommendations, the website is designed to guide customers through every step of the insurance process quickly and efficiently.

According to Ifesinachi Okpagu, the Chief Marketing Officer of Heirs Insurance Group, the new website embodies the company’s commitment to delivering exceptional customer service.

“Today’s customers want simplicity, and this new website delivers on that request,” Okpagu said. “We are empowering customers to take control of their lives, their businesses, assets, and their most cherished people.”

One of the key features of the website is its personalized insurance experience, which takes customers through a short journey to help them identify the best insurance plan for their needs.

Whether customers are looking for coverage for their home, car, business, or loved ones, the website provides tailored recommendations to ensure they find the right insurance solution quickly and easily.

With its user-friendly interface and innovative features, the new website from Heirs Insurance Group sets a new standard for the insurance industry, making it easier than ever for customers to protect what matters most to them.

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Banking Sector

Safaricom, Access Holdings Forge Partnership to Revolutionize Remittance Corridor in Africa

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Access bank

Safaricom, the leading telecommunications company in Kenya, has entered into a strategic partnership with Access Holdings, spearheaded by Aigboje Aig-Imoukhuede.

The collaboration aims to revolutionize the remittance corridor between East and West Africa, marking a significant step towards enhancing financial inclusion and empowering millions of individuals across the continent.

The partnership comes on the heels of Access Holdings’ recent acquisition of the National Bank of Kenya Limited, signaling the company’s ambitious expansion into the East African market.

Leveraging Safaricom’s extensive network and expertise in mobile money through M-Pesa, which currently dominates the mobile money market in Kenya, the alliance seeks to create seamless and efficient channels for remittance transactions.

Aigboje Aig-Imoukhuede, the driving force behind Access Holdings, expressed enthusiasm about the collaboration, highlighting its potential to transcend traditional boundaries and foster greater economic connectivity between East and West Africa.

He highlighted the fusion of collective expertise and resources between the two entities, underlining their shared commitment to driving financial inclusion and empowerment across the continent.

The partnership holds promise for addressing the challenges faced by millions of Africans in accessing affordable and reliable remittance services.

By connecting more than 60 million customers and 5 million businesses across eight countries, the collaboration aims to facilitate over $1 billion in daily transaction value, significantly boosting the flow of remittances within and outside Africa.

With the first phase of the collaboration focusing on key markets such as Nigeria, Kenya, Ghana, and Tanzania, stakeholders anticipate a transformative impact on the remittance landscape, paving the way for greater intracontinental trade and economic integration in line with the objectives of initiatives like the African Continental Free Trade Area (AfCFTA).

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Banking Sector

EFCC Urged to Repatriate Recoveries to NDIC for Depositors’ Relief

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The Nigeria Deposit Insurance Corporation (NDIC) has made a fervent plea to the Economic and Financial Crimes Commission (EFCC) to expedite the repatriation of recovered funds to its coffers to facilitate the timely reimbursement of depositors affected by bank failures.

During a recent meeting between the Managing Director of NDIC, Bello Hassan, and the Executive Chairman of the EFCC, Ola Olukoyede, at the NDIC headquarters in Abuja, Hassan stressed the importance of enhanced collaboration between the two agencies in recovering depositors’ funds lost due to bank failures.

Hassan emphasized that the return of recoveries made by the EFCC on behalf of the NDIC would significantly contribute to the prompt reimbursement of affected depositors.

He commended the EFCC for its unwavering efforts in combating corruption and financial crimes, highlighting its crucial role as a key member of the Taskforce on Implementation of the Failed Banks Act chaired by the NDIC.

The NDIC boss also highlighted the existing partnership between the two organizations, which led to the establishment of the NDIC Help Desk at the EFCC in 2022.

He disclosed that several high-profile cases referred to the EFCC were currently under investigation.

In response, Olukoyede reiterated the EFCC’s commitment to collaborating closely with the NDIC to combat financial crimes and safeguard the integrity of the Nigerian banking sector.

He pledged to intensify efforts to repatriate recovered funds promptly, acknowledging the interconnectedness between criminal activities and bank failures.

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